Prosper.com is America’s first online Peer-to-Peer (P2P) personal loans marketplace.
People who need to borrow money sign up at Prosper.com and create personal loan listings.
People who want to lend money sign up at Prosper.com and invest in those loan listings.
Prosper works a lot like eBay, except that at Prosper, you’re not trading collectibles or other goods – you’re trading real money. No bank or broker required. Just post a listing or place a bid!
How Prosper.com Personal Loans Work for Borrowers
Borrowers sign up and provide their personal details to Prosper. They must pass an identity verification screening as well as a credit check (through Experian). They are then assigned a credit grade by Prosper, which will range from AA (for great credit) to E (for decent credit). At that point, they are allowed to begin creating a listing for the loan that they will request.
Borrowers can choose to request an unsecured personal loan of any amount from $2k to $25k (though there are a few states that have different limits). Personal loan rates are set based upon the borrower’s credit score and range from 5.99% to 35.64%, depending on credit history. Once the borrower has completed their listing and posted it to the marketplace, lenders are then able to bid on and invest in the loans.
Click here to see our in-depth Borrower’s Guide to Prosper.com Loans.
How Prosper.com Personal Loans Work for Investors
Lenders (investors) browse the loan listings looking for borrowers to fund. When they browse, they will see a mixture of numerical data from each borrower’s Experian(tm) credit report, including such items as: credit grade (AA-E), the length of the borrower’s credit history, the number of current delinquencies the borrower may have, the current utilization of revolving credit (as a percentage), the total current revolving debt burden (as a dollar figure), the borrower’s debt-to-income ratio, the borrower’s homeownership status, and a number of other credit details which they can take into account.
Social Lenders read the narratives and go over the credit details, and then have the option of funding (or partially funding) the loan. And here’s the beauty part: The way that lenders fund a loan is by placing bids (in amounts as small as $25 per loan or as large as $25k, the maximum individual loan size) on each loan. Lenders can specify the amount that they wish to bid (invest) in any particular loan.
For larger lenders, or those who prefer a more analytical/quantitative approach, Prosper additionally provides automated bidding methods (such as “Automated Plans”) for lenders who wish to deploy funds more rapidly or do not have time to browse large numbers of listings and instead choose to bid “by the numbers” based upon credit details. These lenders retain the full control that a manual or “Social” lender would have, except that they pre-set the per-loan credit criteria that they’re interested in funding, and they are saved the time of having to search through listings by hand – but they sacrifice none of the investing control that a manual lender has, as they are able to refine their own investment plans in any way which they choose, based upon their own analyses, using the hundreds of per-loan variables Prosper provides.
Click here to see our in-depth Lender’s guide to Prosper.com Lending.
|Peer-to-Peer Personal Loan Market:||Prosper ||
|Prosper.com Loan Types|
|Debt Consolidation Loans||•|
|Credit Card Consolidation Loans||•|
|Home Improvement Loans||•|
|P2P Loan Amounts|
|Personal Loan Amounts||$2,000 – $35,000|
|Business Loan Amounts||$2,000 – $35,000|
|Debt Consolidation Loan Amounts||$2,000 – $35,000|
|P2P Loan Rates & Terms|
|Borrower Interest Rates||6.73 – 35.36%|
|Borrower Loan Term||3 or 5 Years|
|P2P Loan Fee Structure|
|Loan Origination Fee (Added to Loan Amount)||1.95 – 4.95%|
|Payment Servicing Fee (Charged to Lenders)||0.00 – 1.00%|
|Minimum Credit Score||640|
|Maximum Debt-to-Income Ratio||None|
The information contained in this chart comes from the websites of the Peer-to-Peer Lending providers listed and is current as of 6/13/11. Rates & fees are variable, in some instances, and are not APR calculations. Please consult your Peer-to-Peer Loan provider for details.